Prior to October 2013, the IRS required FSA enrollees to forfeit all funds left unclaimed in their flexible spending account at the end of the benefit year, which may include up to a 2-1/2 month grace period if written in the program’s governing plan document. This is the “use it or lose it” rule.

In October 2013, the Treasury and the IRS modified the forfeiture (“use-or-lose”) rule for health care flexible spending accounts (FSAs). FSA programs may now allow their participants to carry over up to $500 of unused health care FSA funds to the next plan year OR allow enrollees up to a 2-1/2 month grace period at the end of the plan year to use the funds in their flexible spending accounts. Employers also have the option of offering neither.

FSAFEDS is a Flexible Spending Account (FSA) program for Federal employees. It is a voluntary tax-favored program that allows employees to pay for eligible out-of-pocket health care and dependent care expenses with pre-tax dollars. It is an account where participants contribute money from their salary before taxes are withheld, then get reimbursed for their out-of-pocket health care and dependent care expenses. Rules and regulations are governed by the Internal Revenue Service (IRS).

Starting in 2015, each flexible spending account has a minimum contribution of $100 per year. The previous minimum contribution was $250.
FSAFEDS has a minimum reimbursement threshold of $25. If you file a claim for an eligible expense less than $25, FSAFEDS will process your claim and send you a statement, but you will not be reimbursed until you file another claim and your aggregate claims total at least $25.

No. 2014 health care FSA participants have a 2-1/2 month grace period from January 1, 2015 through March 15, 2015. During this grace period, these participants can incur eligible health care expenses and be reimbursed from their 2014 balance. This is the last year health care FSAs have a grace period.
2015 health care FSA participants will not have a grace period; instead, they will be able to carry over up to $500 of unspent funds from 2015 to 2016.

The grace period is an additional 2 ½ months (running January 1 through March 15) during which you can incur eligible expenses that can be reimbursed from your prior year’s balance. The grace period helps participants avoid forfeiting any of the funds deposited in their FSA account. Dependent care accounts have a grace period every year. The last grace period for health care accounts is January 1, 2015 through March 15, 2015.

Yes. Like general expense health care FSAs, limited expense health care FSAs have a grace period from January 1, 2015 through March 15, 2015. During this grace period, you can incur eligible expenses for your type of health care FSA and be reimbursed from your 2014 balance. This is the last grace period for health care FSAs.
If you enroll in a general expense or limited expense health care FSA for 2015, you will not have a grace period. Instead, you will be able to carry over up to $500 of unspent funds into another health care account in 2016.